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Bitcoin may have a rather dirty problem; the emissions created by mining the popular cryptocurrency could accelerate global warming and undermine international efforts to combat climate change. The power demands and constant churn in computer hardware that the cryptocurrency requires to be profitable are having a big environmental impact, and governments are starting to take notice.

Bitcoin Is Viewed As Dirty Currency.

A study published in the journal Nature Climate in 2018 concluded that the growth of Bitcoin could produce enough emissions by itself to raise global temperatures by 3.6 degrees Fahrenheit (2 degrees Celsius) as soon as 2033. Another study released earlier revealed that Bitcoin mining in China is so carbon-intensive that it could derail the country's emissions reduction targets.

The problem is cryptocurrency mining 'farms', which are usually large spaces housing computers dedicated to mining the coins; sometimes, these farms will have thousands of computers all working simultaneously to increase profitability. This process requires an enormous amount of computing power and thus tends to consume immense amounts of energy. The result of this is that bitcoin-mining operations are constantly chasing cheap electricity. Cheap electricity can be found in China, which now accounts for more than 75% of bitcoin mining around the world. The problem with this is that coal and other fossil fuels are currently a major source of electricity worldwide, with two-thirds of all power plants globally burning fossil fuels for energy.

“Bitcoin alone consumes as much electricity as a medium-sized European country,” says Professor Brian Lucey at Trinity College Dublin. “This is a stunning amount of electricity. It’s a dirty business. It’s a dirty currency.”

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It's More Than Just Energy Consumption

A new critique of Bitcoin and other cryptocurrencies has come into focus recently with the focal point, not on the energy consumption of the mining farms, but the thousands of computers that the mining farm consists of. Specialized machines known as ASICs (application-specific integrated circuits) are sold for the sole purpose of mining, and only the newest chips are power-efficient enough to mine bitcoin profitably. This results in a high churn rate in these machines, as effective miners need to constantly replace their ASICs with newer, more powerful ones. The lifespan of these mining machines is limited to just 1.29 years, according to the researcher by Alex de Vries and Christian Stoll.

The high turnover of these specialized machines creates a lot of electronic waste, electronic products which have reached the end of their usefulness. ASICs serve no other purpose than to mine cryptocurrencies, so when they can no longer mine them profitably, they cease to serve a purpose. According to a new analysis by economists from the Dutch central bank and MIT, because of the high churn of these machines, a single bitcoin transaction creates the same amount of electronic waste as throwing away two iPhones. There were 253,000 transactions last month.

De Vries and Stoll write in the paper, “We estimate that the whole bitcoin network currently cycles through 30.7 metric kilotons of equipment per year. This number is comparable to the amount of small IT and telecommunication equipment waste produced by a country like the Netherlands.”

Countries Are Starting To Take Notice

Bitcoin may be the least efficient currency system ever created, and it’s also becoming a problem for governments. Earlier this year, Iran banned mining of the cryptocurrency for four months after its high energy consumption resulted in blackouts in many of the country’s largest cities.

In Malaysia, police seized and destroyed more than 1000 bitcoin mining rigs by crushing them with a steamroller after the miners had allegedly stolen almost $2 million worth of electricity to power their machines. The miners were charged with stealing energy.

Crackdowns against miners occurred in China as well. Authorities in the country, concerned about the environmental impact of cryptocurrency mining, shuttered many mining operations. The Chinese government told the country’s financial giants they would have to stop dealing in cryptocurrencies. And in Sichuan, the second-biggest bitcoin mining province instituted, a ban on mining was implemented.

A lot of Chinese mining operations that have been shuttered are relocating to neighboring Kazakhstan. The move might be short-lived, however, as a new law signed by the president will introduce extra taxes for crypto miners starting in 2022, making the country less attractive for miners.

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Sources: The New Yorker, CNBC, The Guardian